State: Fining PG&E 'does not make sense'

State PUC recommends money go into safer pipes, not general fund

San Francisco Chronicle reporter Jaxon Vanderbeken breaks down the factors that led to the explosion of a 30-inch high pressure PG&E gas line in a residential neighborhood in San Bruno last year. The blast killed 8 and left dozens homeless.

Media: San Francisco Chronicle

Pacific Gas and Electric Co. shareholders should have to spend $2.25 billion to fix the company's gas pipelines in the wake of the 2010 explosion in San Bruno, but levying a fine against the utility for the dozens of regulatory violations it allegedly committed over decades "does not make sense," a state regulatory agency said Monday.

Any money PG&E spends should go toward making its pipes safer and not be directed into the state's general fund, which is where fines against utilities end up, said Jack Hagan, head of the consumer protection and safety division of the California Public Utilities Commission.

"I am recommending the highest penalty possible against PG&E without compromising safety, and I want every penny of it to go toward making PG&E's system safer," Hagan said.

He said the $2.25 billion - a sum an independent consultant told regulators that PG&E could safely absorb and remain viable - should come from company shareholders, not its customers.

Hagan made his recommendation to two administrative law judges considering how PG&E should be penalized for its actions connected to the September 2010 natural-gas pipeline explosion in San Bruno that killed eight people and destroyed 38 homes.

Photo: Liz Hafalia, The Chronicle

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San Bruno Mayor Jim Ruane, standing with Vice Mayor Irene O'Connell, believes PG&E should be fined $1.25 billion for the 2010 explosion on top of spending $1 billion to improve its system.

San Bruno Mayor Jim Ruane, standing with Vice Mayor Irene O'Connell, believes PG&E should be fined $1.25 billion for the 2010 explosion on top of spending $1 billion to improve its system.

Photo: Liz Hafalia, The Chronicle

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PG&E CEO Tony Earley speaks to reporters during a news conference on the one year anniversary of his hiring at PG&E headquarters on Thursday, August 30, 2012 in San Francisco, Calif.

PG&E CEO Tony Earley speaks to reporters during a news conference on the one year anniversary of his hiring at PG&E headquarters on Thursday, August 30, 2012 in San Francisco, Calif.

Photo: Beck Diefenbach, Special To The Chronicle

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Lawyer Steven Meyers (middle) announced filing a claim for the City of San Bruno against the Pacific, Gas, & Electric company on Monday, May 6, 2013, in front of PG&E headquarters in San Francisco, Calif. Meyers said that PG&E should pay $2.25 billion dollars in penalties and fines for its gross mismanagement and failure to safely operate the gas pipeline in the San Bruno explosion and fire which resulted in the death of 8 residents, injuries to 66 people, and the loss of 38 homes.

San Bruno Mayor Jim Ruane (left) along with communications director Mindy Spatt, (middle, right) of The Utility Reform Network, and lawyer Steven Meyers (far right) representing the City of San Bruno, answer questions about their claim against the Pacific, Gas, & Electric company on Monday, May 6, 2013, in front of PG&E headquarters in San Francisco, Calif. Meyers said that PG&E should pay $2.25 billion dollars in penalties and fines for its gross mismanagement and failure to safely operate the gas pipeline in the San Bruno explosion and fire which resulted in the death of 8 residents, injuries to 66 people, and the loss of 38 homes.

Homes burn in a neighborhood off of Sneath Lane after an explosion, Sept. 9, 2010, in San Bruno, Calif.

Homes burn in a neighborhood off of Sneath Lane after an explosion, Sept. 9, 2010, in San Bruno, Calif.

Photo: Adm Golub, The Chronicle

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Firefighters fought to protect homes on Vermont Street in San Bruno. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Firefighters fought to protect homes on Vermont Street in San Bruno. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Photo: Brant Ward, The Chronicle

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Fire fighters from Pacifica watched in awe of the destruction before them. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Fire fighters from Pacifica watched in awe of the destruction before them. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Photo: Brant Ward, The Chronicle

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Homes burn at the intersection of Claremont and Fairmont in San Bruno, Calif., after a Pacific Gas & Electric Company gas pipeline ruptured and exploded on September 9, 2010, killing 8 people and destroying 38 homes. less

Homes burn at the intersection of Claremont and Fairmont in San Bruno, Calif., after a Pacific Gas & Electric Company gas pipeline ruptured and exploded on September 9, 2010, killing 8 people and destroying 38 ... more

Photo: Jana Asenbrennerova, The San Francisco Chronicle

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A helicopter works to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

A helicopter works to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

Photo: Lance Iversen, The Chronicle

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An entire street of houses burned as night fell. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

An entire street of houses burned as night fell. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Photo: Brant Ward, The Chronicle

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A firefighter battles a widespread fire in San Bruno, Calif., on Thursday, Sept. 9, 2010.

A firefighter battles a widespread fire in San Bruno, Calif., on Thursday, Sept. 9, 2010.

A wheelchair-bound resident is evacuated as homes burn in a neighborhood off of Sneath Lane after an explosion, Sept. 9, 2010, in San Bruno, Calif.

A wheelchair-bound resident is evacuated as homes burn in a neighborhood off of Sneath Lane after an explosion, Sept. 9, 2010, in San Bruno, Calif.

Photo: Adm Golub, The Chronicle

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Fireman on Claremont Drive in San Bruno tried to fight a fire which had burned down the neighborhood. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010. less

Fireman on Claremont Drive in San Bruno tried to fight a fire which had burned down the neighborhood. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday ... more

Photo: Brant Ward, The Chronicle

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San Bruno, Daily city and San Francisaco Fire personal work to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

San Bruno, Daily city and San Francisaco Fire personal work to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

Photo: Lance Iversen, The Chronicle

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Cars and homes lie burned out in San Bruno, Calif. on Thursday, Sept. 9, 2010.

Cars and homes lie burned out in San Bruno, Calif. on Thursday, Sept. 9, 2010.

Photo: Jana Asenbrennerova, Special To The Chronicle

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A home burned as the sun set on a San Bruno neighborhood. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

A home burned as the sun set on a San Bruno neighborhood. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Photo: Brant Ward, The Chronicle

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Fire fighters from around the Peninsula battled the blaze. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Fire fighters from around the Peninsula battled the blaze. A blast believed to be caused by a natural gas explosion destroyed a San Bruno, Calif. neighborhood Thursday September 9, 2010.

Photo: Brant Ward, The Chronicle

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South San Francisco firefighters work to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

South San Francisco firefighters work to contain a fast moving fire caused by an explosion in a San Bruno nighborhood Thursday, Sept. 9, 2010.

Photo: Lance Iversen, The Chronicle

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A for sale sign stands among flattened homes in San Bruno, Calif., on Thursday, Sept. 9, 2010.

A for sale sign stands among flattened homes in San Bruno, Calif., on Thursday, Sept. 9, 2010.

Photo: Noah Berger, Special To The Chronicle

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Millbrae fire chief Dennis Haag at a press conference at the Bayhill shopping center in San Bruno, Calif., on Thursday, September 9, 2010.

Millbrae fire chief Dennis Haag at a press conference at the Bayhill shopping center in San Bruno, Calif., on Thursday, September 9, 2010.

Photo: Liz Hafalia, The Chronicle

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A fire burns among homes in San Bruno, Calif. with San Francisco Airport and the East Bay in the background, on Thursday, Sept. 9, 2010.

A fire burns among homes in San Bruno, Calif. with San Francisco Airport and the East Bay in the background, on Thursday, Sept. 9, 2010.

Photo: Adam Lau, The Chronicle

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Rene Morales mourns at her daughter's, Jessica, funeral.

Rene Morales mourns at her daughter's, Jessica, funeral.

Photo: Paul Chinn, The San Francisco Chronicle

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Emergency crews pump water from a crater in San Bruno, Calif. on Friday, Sept. 10, 2010 after a massive natural gas pipeline explosion destroyed dozens of homes Thursday night.

Emergency crews pump water from a crater in San Bruno, Calif. on Friday, Sept. 10, 2010 after a massive natural gas pipeline explosion destroyed dozens of homes Thursday night.

Photo: Paul Chinn, The Chronicle

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Federal investigators examine a 40-foot section of pipeline on Glenview Drive in San Bruno, Calif. on Saturday, Sept. 11, 2010. Four people were killed and more than 35 homes destroyed after the pipeline exploded creating a large crater (background). less

Federal investigators examine a 40-foot section of pipeline on Glenview Drive in San Bruno, Calif. on Saturday, Sept. 11, 2010. Four people were killed and more than 35 homes destroyed after the pipeline ... more

Photo: Paul Chinn, The Chronicle

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A view of the wreckage in San Bruno is seen on September 10, 2010. Many people had to evacuate their home after a massive natural gas pipeline explosion Thursday night.

A view of the wreckage in San Bruno is seen on September 10, 2010. Many people had to evacuate their home after a massive natural gas pipeline explosion Thursday night.

Photo: Susana Bates, Special To The Chronicle

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Damaged cars in the driveway of a home on Glenview Drive in San Bruno on Saturday.

Damaged cars in the driveway of a home on Glenview Drive in San Bruno on Saturday.

Photo: Paul Chinn, The Chronicle

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Authorities search through the rubble of a home on Glenview Drive in San Bruno on Saturday.

Authorities search through the rubble of a home on Glenview Drive in San Bruno on Saturday.

Photo: Paul Chinn, The Chronicle

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Fire crews put out hot spots at a home in San Bruno, Calif. on Friday, Sept. 10, 2010 that was destroyed after a massive natural gas pipeline explosion Thursday night.

Fire crews put out hot spots at a home in San Bruno, Calif. on Friday, Sept. 10, 2010 that was destroyed after a massive natural gas pipeline explosion Thursday night.

Photo: Paul Chinn, The Chronicle

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Firefighter Nick Olivera cools down as he puts out burning embers in the homes along Fairmont, Friday Sept. 10, 2010, in San Bruno, Calif.

Firefighter Nick Olivera cools down as he puts out burning embers in the homes along Fairmont, Friday Sept. 10, 2010, in San Bruno, Calif.

Photo: Lacy Atkins, The Chronicle

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Sheriffs and inspectors walk with a cadaver dog out Glenview Drive, looking for bodies, Friday Sept. 10, 2010, in San Bruno, Calif.

Sheriffs and inspectors walk with a cadaver dog out Glenview Drive, looking for bodies, Friday Sept. 10, 2010, in San Bruno, Calif.

San Bruno Mayor Jim Ruane speaks at a press conference September 10, 2010 in San Bruno, California. A massive explosion rocked a neighborhood near San Francisco International Airport, destroying 53 homes, killing at least 4 people, and injuring more than 50. less

San Bruno Mayor Jim Ruane speaks at a press conference September 10, 2010 in San Bruno, California. A massive explosion rocked a neighborhood near San Francisco International Airport, destroying 53 homes, ... more

Photo: Max Whittaker, Getty Images

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San Bruno, Calif., resident Lester Vaccari, bottom, listens to find out when he can return to his home following a massive gas explosion, during a news conference at a shopping center in San Bruno, Calif., Friday, Sept. 10, 2010. Fire crews sprayed wateron smoldering homes Friday morning after a massive explosion apparently triggered by a broken gas line sent flames roaring through a neighborhood near San Francisco, killing at least six people and injuring dozens, officials said. less

San Bruno, Calif., resident Lester Vaccari, bottom, listens to find out when he can return to his home following a massive gas explosion, during a news conference at a shopping center in San Bruno, Calif., ... more

Photo: Eric Risberg, AP

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Firefighters and police officers dig through the debri looking for bodies, from last nights inferno, Friday Sept. 10, 2010, in San Bruno, Calif.Firefighters and police officers dig through the debri looking for bodies, from last nights inferno, Friday Sept. 10, 2010, in San Bruno, Calif. less

Firefighters and police officers dig through the debri looking for bodies, from last nights inferno, Friday Sept. 10, 2010, in San Bruno, Calif.Firefighters and police officers dig through the debri looking ... more

Photo: Lacy Atkins, The Chronicle

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Karen Frechette expresses her frustration on not being allowed to see if her house or pets survived an explosion September 10, 2010 in San Bruno, California. Thirty eight homes were destroyed and four people were killed whena Pacific Gas and Electric gas main blew up in a San Bruno, California neighborhood near San Francisco International Airport on Thursday evening. less

Karen Frechette expresses her frustration on not being allowed to see if her house or pets survived an explosion September 10, 2010 in San Bruno, California. Thirty eight homes were destroyed and four people ... more

Photo: Max Whittaker, Getty Images

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Volunteers are seen outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. Many families had to evacuate their home after a massive natural gas pipeline explosion Thursday night. less

Volunteers are seen outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. Many families had to evacuate their home after a massive natural gas pipeline explosion Thursday ... more

Photo: Susana Bates, Special To The Chronicle

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Food for pets is among the donations at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a confirmed 4 fatalities, and displacing many familes. less

Food for pets is among the donations at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a confirmed 4 fatalities, and ... more

Photo: Adm Golub, The Chronicle

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Two unidentified people wait at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a confirmed 4 fatalities, and displacing many families. less

Two unidentified people wait at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a confirmed 4 fatalities, and displacing ... more

Photo: Adm Golub, The Chronicle

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Unidentified people hug as they reunite the day after the explosion at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a confirmed 4 fatalities, and displacing many families. less

Unidentified people hug as they reunite the day after the explosion at the San Bruno Recreation Center, Sept. 10, 2010, in San Bruno, Calif. An explosion destroyed a reported 38 homes damaging more, causing a ... more

Photo: Adm Golub, The Chronicle

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Residents displaced by the fiery blast leave a bus after being briefed on services at the Bay Hill shopping center in San Bruno.

Residents displaced by the fiery blast leave a bus after being briefed on services at the Bay Hill shopping center in San Bruno.

Photo: Liz Hafalia, The San Francisco Chronicle

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Betti and Bill Magoolaghan, who have a home red-tagged inside the San Bruno burn area, were reunited with their dog Friday afternoon at the Peninsula Humane Society in San Mateo. Their dog, Sharpee, did not follow them as they evacuated after the natural gas line explosion and was found inside their home on Claremont Drive. less

Betti and Bill Magoolaghan, who have a home red-tagged inside the San Bruno burn area, were reunited with their dog Friday afternoon at the Peninsula Humane Society in San Mateo. Their dog, Sharpee, did not ... more

Photo: Michael Macor, The Chronicle

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Evacuees Melah Alash and her 9-year-old daughter, Sara, pick up some donated items at the Veterans Memorial Recreation Center after evacuating their San Bruno home.

Evacuees Melah Alash and her 9-year-old daughter, Sara, pick up some donated items at the Veterans Memorial Recreation Center after evacuating their San Bruno home.

Photo: Susana Bates, The San Francisco Chronicle

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Julio (left) and his mother Antonia Locon (in red) are seen outside the Veterans Memorial Recreation Center in San Bruno on Friday September 7, 2010. Their family had to evacuate their home after a massive natural gas pipeline explosion Thursday night. less

Julio (left) and his mother Antonia Locon (in red) are seen outside the Veterans Memorial Recreation Center in San Bruno on Friday September 7, 2010. Their family had to evacuate their home after a massive ... more

Photo: Susana Bates, Special To The Chronicle

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Dana Coffin uses a free cell phone to make a call to tell his friends what is happening to him at the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. His home was evacuated due to a major explosion last night. less

Dana Coffin uses a free cell phone to make a call to tell his friends what is happening to him at the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. His home was evacuated due to ... more

Photo: Susana Bates, Special To The Chronicle

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Julio Locon (right) gets information at the Veterans Memorial Recreation Center in San Bruno on Friday September 7, 2010. His family had to evacuate their home after a massive natural gas pipeline explosion Thursday night. less

Julio Locon (right) gets information at the Veterans Memorial Recreation Center in San Bruno on Friday September 7, 2010. His family had to evacuate their home after a massive natural gas pipeline explosion ... more

Photo: Susana Bates, Special To The Chronicle

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Patty Gillen-Rizzo and Tim Gillen look over a list of damaged homes outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. Their parents home is not included on the list.

Patty Gillen-Rizzo and Tim Gillen look over a list of damaged homes outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. Their parents home is not included on the list.

Photo: Susana Bates, Special To The Chronicle

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Margarita Astudillo kisses her baby outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. She had to evacuate the home she was staying at after a massive natural gas pipeline explosion Thursday night. less

Margarita Astudillo kisses her baby outside the Veterans Memorial Recreation Center in San Bruno on Friday September 10, 2010. She had to evacuate the home she was staying at after a massive natural gas ... more

Photo: Susana Bates, Special To The Chronicle

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PG&E workers were busy with power line completion, this one being on Glenview Drive. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

PG&E workers were busy with power line completion, this one being on Glenview Drive. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

Photo: Brant Ward, The Chronicle

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Captain Bill Forester of the San Bruno fire department, one of the first on the scene, was shocked when they discovered there was no water in the local hydrants. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010. less

Captain Bill Forester of the San Bruno fire department, one of the first on the scene, was shocked when they discovered there was no water in the local hydrants. First responders to the San Bruno, Calif. ... more

Photo: Brant Ward, The Chronicle

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County fire officials looked over a burned up car on Claremont Drive as they walked the burned out neighborhood. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010. less

County fire officials looked over a burned up car on Claremont Drive as they walked the burned out neighborhood. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences ... more

Photo: Brant Ward, The Chronicle

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Friends and family gather at the vigil for Jacqueline and Janessa Greig, Thursday Sept. 16, 2010, at the Saint Cecilia's Church in San Francisco, Calif. The mother and daughter were killed last Thursday when the gas line exploded in San Bruno, destroying 37 homes and killing 4. less

Friends and family gather at the vigil for Jacqueline and Janessa Greig, Thursday Sept. 16, 2010, at the Saint Cecilia's Church in San Francisco, Calif. The mother and daughter were killed last Thursday when ... more

Photo: Lacy Atkins, The Chronicle

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Friends and family gather at the vigil for Jacqueline and Janessa Greig, Thursday Sept. 16, 2010, at the Saint Cecilia's Church in San Francisco, Calif. The mother and daughter were killed last Thursday when the gas line exploded in San Bruno, destroying 37 homes and killing 4. less

Friends and family gather at the vigil for Jacqueline and Janessa Greig, Thursday Sept. 16, 2010, at the Saint Cecilia's Church in San Francisco, Calif. The mother and daughter were killed last Thursday when ... more

Photo: Lacy Atkins, The Chronicle

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Governor Arnold Schwarzenegger, (center) is joined by the Secretary of California Emergency Management Agency, Matt Bettenhausen, (left) along with other officials, as they visit the site of last weeks natural gas explosion on Wednesday Sept. 15, 2010, in San Bruno, Calif. less

Governor Arnold Schwarzenegger, (center) is joined by the Secretary of California Emergency Management Agency, Matt Bettenhausen, (left) along with other officials, as they visit the site of last weeks natural ... more

Photo: Michael Macor, The Chronicle

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The backyards of some destroyed homes on Concord Street. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

The backyards of some destroyed homes on Concord Street. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

Photo: Brant Ward, The Chronicle

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On Claremont Drive, a sign thanking firemen and police officers. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

On Claremont Drive, a sign thanking firemen and police officers. First responders to the San Bruno, Calif. pipeline explosion talked about their experiences Tuesday September 14, 2010.

Photo: Brant Ward, The Chronicle

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Workers from Vanderbuilt Construction secure the properties by boarding up windows of the homes that are red tagged from last weeks explosion, Tuesday Sept. 14, 2010, in San Bruno, Calif.

Workers from Vanderbuilt Construction secure the properties by boarding up windows of the homes that are red tagged from last weeks explosion, Tuesday Sept. 14, 2010, in San Bruno, Calif.

Robin Melendez react as she thinks of how close her home was to last weeks inferno, Tuesday Sept. 14, 2010, in San Bruno, Calif." I literally thought I was going to die, but my father is my angel and saved me," said Robin. Her father died July 26th of this year. less

Robin Melendez react as she thinks of how close her home was to last weeks inferno, Tuesday Sept. 14, 2010, in San Bruno, Calif." I literally thought I was going to die, but my father is my angel and saved me," ... more

Photo: Lacy Atkins, The Chronicle

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Residents got a chance to see the sight where their home once stood, Monday Sept. 13, 2010, as the police escorted them through the neighborhood in San Bruno, Calif. These residents homes were red tagged after the explosion.Residents got a chance to see the sight where their home once stood, Monday Sept. 13, 2010, as the police escorted them through the neighborhood in San Bruno, Calif. These residents homes were red tagged after the explosion. less

Residents got a chance to see the sight where their home once stood, Monday Sept. 13, 2010, as the police escorted them through the neighborhood in San Bruno, Calif. These residents homes were red tagged after ... more

Photo: Lacy Atkins, The Chronicle

State: Fining PG&E 'does not make sense'

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In a legal filing, Hagan said, "The present case is an extraordinary one where the usual remedy of imposing penalties, which would go to the general fund, does not make sense. PG&E's gas transmission system is broken due to decades of PG&E mismanagement, and it will take billions of dollars and years to bring it up to acceptable safety standards."

The utility has only so much money, and fining it could leave PG&E with nowhere to turn to pay for system improvements but its customers, Hagan said.

The utilities commission staff has alleged that PG&E maintained an unsafe pipeline system, kept incomplete records and mounted an inept emergency response the night of the explosion.

PG&E reacts

In a statement, PG&E's chief executive officer, Tony Earley, said, "I understand the desire to punish PG&E." But he added that the remedies proposed by Hagan and other parties in the case "far exceed anything that I have seen in my 30 years in the industry and fail to appropriately account for the actions taken by the company."

He called for a "more balanced approach."

In contrast to Hagan's suggestion, San Bruno officials asked Monday that PG&E be fined $1.25 billion on top of $1 billion to improve its system. Mayor Jim Ruane said such a fine would show that the utilities commission can be a "tough regulator" and hold PG&E accountable for "gross mismanagement."

The Utility Reform Network, a ratepayer advocacy group, proposed fining PG&E $720 million. The group wants PG&E pay an additional $1 billion for safety fixes, including testing and inspecting pipelines, on top of $500 million that it says the company has already agreed to take from shareholders.

No timetable

The two administrative law judges hearing the case against PG&E will issue their own recommendations on how much the company should be penalized, and the five-member utilities commission will make the final decision. No timetable has been set.

Earley told reporters after a shareholders meeting in San Francisco that a large fine would be "unrealistic," given that it has already spent $1.5 billion of shareholders' money on repairs, victims compensation, legal bills and other costs from the disaster.

"I think the company has already paid a very heavy price," Earley said.

The company would pay higher interest rates to borrow money, he said, and would have a harder time attracting investors when it issues stock. PG&E plans to issue up to $1.2 billion in stock this year to help pay for pipeline repairs.

Money not in bank

"I don't have that money sitting in the bank," Earley said. "I've got to go out and raise that money from shareholders who are willing to invest in the company in the future. I don't write them a letter and say, 'Please, shareholders, send me a thousand dollars each.' "

The fines proposed by San Bruno and The Utility Reform Network would not threaten PG&E's stability, Earley said. But by increasing the cost and difficulty of raising capital, it could slow the speed of pipeline repairs and upgrades, he said.

In this year alone, the company plans to replace about 60 miles of pipeline, perform high-pressure water testing on another 200 miles and install 50 automated valves.

"I don't know the number you'd have to get to where the company would be threatened," Earley said. "The thing that would be threatened is, the company could not keep spending the money on safety that we need to spend."